Snap Seeks New Growth With Spectacles and Augmented Reality Games

This week, Snap, Inc. released Spectacles V2, a new version of its iWear/smart glasses, with a few notable upgrades.

The second-generation version can take photos, be used underwater, and record HD videos. Plus, syncing with the Snapchat app is now three to four times faster. The tech sunglasses are currently listed on Snap's website and app for $150.

Snap's first generation of Spectacles left a lot to be desired with consumers. In fact, Spectacles left Snap with a net loss of $40M after only 200,000 pairs of glasses were sold. The biggest issue wasn't just the lack of sales, but the lack of regular users as the frequency of use dropped significantly over time.

Though Snap faced criticism from users over a January 2018 software update to its popular messaging app, the Venice, CA-based company hasn't stopped growing. The company reported significant user growth, adding nearly 9M daily active users in the last quarter of the year. (It will be seen if Snapchat can outrun the current user controversy when Snap reports its 2018 first-quarter report in the coming weeks.)

Advertising revenues are the primary source of income for Snapchat and it has increasingly focused on driving ad spending by brands, which was the focus of the controversial update in January. The unskippable ads, deemed "Commercials," would play during Snapchat Shows, not during user-generated content.

The AR games are an effort to separate itself from Snapchat's competition. To grow and retain its user base, Snap will increasingly be under pressure to prove why users should invest their time and create content for Snapchat over Instagram and Facebook.

Consumers are still largely unfamiliar with augmented reality. The additional AR content would familiarize consumers with the UI without the need for proper familiarity. By the time AR smart glasses fully hit the consumer market, the education curve could be decreased without the consumer even aware of it.